Polestar heads to South Korea

Sino-Swedish EV pure play Polestar’s solution on how to avoid US import tariffs on its new Polestar 4 vehicles made in China is to be found just a short hop over the East China Sea. The firm will make the model in Busan, South Korea, expected to start during the second half of 2025.

Polestar has agreed with its Chinese parent Geely and Renault Korea Motors (RKM) — a joint venture between France’s Renault, Geely and South Korean battery heavyweight Samsung SDI — that will see contract manufacturing of Polestar 4 vehicles for the North American and domestic South Korean markets at RKM’s Busan plant.

The Korus free trade agreement between South Korea and the US in entered into force in March 2012. And, in 2019, the highest value of goods imported into the US from South Korea was automobiles, at a value of $21bn, or some 27pc of the value of all South Korean imports.

So the location certainly ticks Polestar’s box of somewhere that “enjoys more favourable trade agreement terms with the US” than China currently does. It perhaps does not offer the cheaper manufacturing base and proximity to the US market that led EV inFocus to speculate on Mexico being a possible next destination for Polestar 4 construction.

The fact that Polestar is using a factory in which Geely has an existing stake does, though, tick another box in terms of its “asset-light approach to development and manufacturing”.

Going electric

“Polestar 4 will be the first full battery electric vehicle produced in the Busan plant, symbolising Renault Korea Motors renewal and our ambitious vision for the future,” says RKM CEO Stephane Deblaise. This raises another question.

Renault Group has spun off its BEV manufacturing and software into a standalone entity, Ampere, as of the start of this month. And there is a certain surface logic to splitting a legacy OEM with a focus on ICE and hybrid vehicles away from an EV pure play that can both focus on electrification and potentially attract investors who want a standalone EV maker without ICE baggage.

But JVs and subsidiaries make this a much less satisfying solution. RKM may benefit from learning from making BEVs in Busan. But these will flow back to its parent, Renault, that is focused on ICEs and hybrids, not Ampere.

It is a similar problem with Renault’s Romanian subsidiary Dacia. It currently has the Spring, which boasts of being Europe’s cheapest BEV, and has plans for other BEV launches. But, as of yet, there has been no indication that Renault plans to bring Dacia’s BEV programme under the Ampere umbrella.

So, again, there will be Renault subsidiary developing a BEV business, but ‘reporting in’ to an ICE and hybrid OEM, siloed from its own BEV arm. It does not sound like an ideal solution.